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The staffing industry has fallen victim to yet another year of workers compensation (WC) cost increases. States that have enacted meaningful WC reforms are offering some advisory rate reductions; however, most states refuse to address the numerous problems employers are facing.
In many states, the insurance company cannot deviate from the published state rates, so any increases translate directly into your costs. In the aggregate, the increases are less than they were in 2013, so the trend is in the right direction. Until the profitability for insurance companies improves and states enact meaningful reform, the rates will not decrease.
The following are recent announcements related to individual state rates:
- California - 7.6% increase
Laying Down Salt
Since staffing is one of the most difficult industries to underwrite (with few available carriers), agencies are getting hit hard with these rate increases. Heres what you can do to help control costs.
1. Stop WC claims from happening A quality risk management program should include proactive measures, such as visiting client worksites, constructive and effective training of new hires, ongoing training of all temp employees and requiring employees to be part of your client's safety programs.
2. Aggressively manage your current claims By taking an active role, you can affect the ultimate cost of claims. Aggressive investigation of a claim can yield details that could identify the claim as fraudulent. An active Return to Work program can also lower the overall cost of a claim.
3. Consider taking risk in your WC program Insurance carriers are pricing your guaranteed cost insurance program so they can make a 15-20% profit. Get some of that profit back by taking risk in your insurance program. This can be accomplished by moving from a traditional guaranteed cost program to a captive, retro or deductible program.
4. Work with a broker who knows the staffing industry Brokers that work in the staffing space understand the unique needs of the industry and have access to the insurance carriers with an appetite for underwriting staffing exposures. They can also demonstrate ways to improve your loss results, which ultimately results in lower insurance premiums.
ABOUT THE AUTHOR
Kurt Murray is a Principal at Assurance who focuses on mid-sized companies in the staffing industry. With over 20 years of experience, his primary client responsibility is to provide cost-effective solutions and develop insurance programs that are individualized to a company’s specific needs. He deems it necessary to fully understand a client and their specific needs in order to properly develop their risk management program. Kurt graduated from Northern Illinois University with a Bachelor of Science degree in Finance. He’s been a presenter at numerous staffing industry events and conferences, including TempNet, American Staffing Association (ASA), New Jersey Staffing Association (NJSA) and Staffing Services Association of Illinois (SSAI).